Strategic Comments

JIIA Strategic Comments (2020-2):
The Novel Coronavirus Outbreak and Its Political/Economic Impact on China

LI Hao (Research Fellow, The Japan Institute of International Affairs)

As of March 9, 2020, instances of pneumonia attributable to the novel coronavirus (COVID-19) have appeared in more than 100 countries; more than 80,000 persons have been infected in China, of whom over 3,000 have died. These infections have spread to Japan, South Korea, Italy, Iran and elsewhere, devastating global exchange and economic activity. This paper offers a brief examination of the political and economic impact of this outbreak on China.

Slow off the mark

China has been harshly criticised for the delays in its initial response to the COVID-19 outbreak and the consequential spread of the virus. Sufficient countermeasures were not taken when COVID-19 infections were first confirmed in Wuhan (Hubei Province) in December 2019, and regional People's Congress meetings and Lunar New Year-related events were held even as the virus spread in January. Xi Jinping's instructions on infection countermeasures were conveyed on January 20, marking a sea change in the official response: large-scale compulsory shutdowns were imposed, with the city of Wuhan closed off and public transport suspended.

Reflecting on its experiences after the 2003 SARS epidemic, China had set up a Center for Disease Control and Prevention (CDC) and endeavoured to upgrade its epidemic countermeasures in an integrated fashion. The CDC dispatched a specialist team to Wuhan at the end of December on the basis of information compiled to that point. However, information related to the disease were not publicly available nor did any preventive countermeasures undertaken. Indeed, several doctors who warned that a SARS-like coronavirus outbreak was taking place were cautioned by the police for spreading "false rumours".1

The initial response was clearly slow, and this undeniably helped the infections spread. Perhaps recognising this, Xi Jinping stated at the February 3 meeting of the Politburo Standing Committee that he had issued instructions regarding COVID-19 countermeasures at the January 7 meeting, stressing that he had been aware of the problem early on and had immediately taken action. At the same time, he acknowledged problems with the initial response, for which he dismissed the party secretaries for Hubei Province and Wuhan City, the epicentre of the COVID-19 outbreak. He thereby sought to place the blame on local leaders and position himself at the forefront in the fight against the virus.

The reasons for the delayed initial response will likely be analysed for quite some time to come. Many persons are believed to have intentionally concealed information. In fact, the halt in announcements about the number of coronavirus infections during the Wuhan and Hubei Province People's Congresses in January leaves no doubt that the numbers were manipulated, although it is not clear at whose direction this was done. In an interview with China Central Television on January 27, Wuhan mayor Zhou Xianwang complained that "even if regional governments obtain information, they cannot release it without authorisation", suggesting that fault also lay with the central government.2 Indeed, the central government was already privy to a certain degree of information in early January, and it is known that this information was shared with the US. Regardless of the actual facts, the central government has managed at present (March 9) to assign any blame to local leaders while it goes about encouraging greater information disclosure and active countermeasures.

A closer look at the delays in the initial response, however, raises doubts about the degree to which regional and central government officials recognised the seriousness of the situation. No sense of crisis was apparent in the responses of Wuhan and Hubei Province until mid-January, and there were no signs that the outbreak had become a major matter of concern for the central government either. Accordingly, it may well be the case that, rather than having recognised the danger of the outbreak and intentionally concealed it, officials underestimated the risk and, giving priority to social stability, neglected to release sufficient information to the public and take initial countermeasures

Impact on the Xi Jinping administration

Many observers and media outlets see this COVID-19 outbreak as both a major test and a major blow to the Xi Jinping administration. It has been argued that Xi's centralisation of power prevented effective countermeasures from being carried out until instructions from Xi himself were forthcoming, and that consequently Xi as the top-ranking leader must take responsibility. A closer study of the circumstances as they developed over time, however, shows that this explanation is not accurate.

Xi has conducted numerous meetings on this crisis and issued a series of instructions in an attempt to portray himself at the very heart of efforts to counter the outbreak. He insists that he issued instructions on January 7, and he has been holding local governments strictly accountable for the slow initial response. Having dismissed the party secretaries for Hubei Province and Wuhan and replaced them with people from his own circle, Xi has shown that he is not on the defensive. He has made the risky choice of putting himself out front and centre, and he is working to bolster the impression that any fault lies with local leaders and that he himself has played a crucial role in the central government's efforts to deal with the problem. This tactic seems at present to have been somewhat successful.

The physicians who sounded the alarm in the first days of the outbreak have now seen their reputations restored. The clinical physicians on the front lines of the fight have come to be regarded as heroes, with moving stories about their heroism being regularly reported. It seems the Chinese nation has joined together as one to fight the epidemic, and the people are beginning to feel that victory is in sight. Reports from China indicate that the number of new infections is declining and that successes are being scored in containing the spread of the virus. This novel coronavirus outbreak represents a major public health crisis for China, but the administration seems to be striving to fashion this into a tale of victory on its part. If this is indeed the case, it is by no means impossible that the Xi Jinping administration will see its authority enhanced, much in the same way that the earlier Hu Jintao administration was bolstered by its fight against SARS.

A decision was reached on February 24 to postpone the National People's Congress scheduled to open on March 5, and this has been regarded as another test of the Xi Jinping administration. With some regional People's Congresses having cancelled their own meetings, however, convening the National People's Congress was impractical. In addition to the national government having banned large gatherings, many of the representatives were local leaders not in a position to step away from their duties as they dealt with the coronavirus. This made the postponement a natural and indeed inevitable decision. While important issues such as budgets and deliberations on bills still remain, it is possible under a system such as China's to adopt a flexible stance, citing an emergency as justification. In that sense, the postponement of the Congress itself will likely have a limited impact on the administration.3 However, no new date has yet been announced (as of March 9). If circumstances were to compel the government to postpone the Congress once again after a new date had been selected, this would be seen as indicative of a failure of the government's coronavirus countermeasures and thus could prove damaging to the administration. The Xi administration needs to proceed cautiously in rearranging the schedule.

The biggest problem posed by the coronavirus outbreak for the Xi administration is economic stagnation. The administration has attempted to halt the spread of infections by restricting the movement of people around the Lunar New Year holidays and forcibly suspending most economic activities for a month. The impact on the economy has been enormous. The travel and food/beverage industries among many others have been devastated, and the government will be forced to take some difficult steps, including the provision of relief to these industries, to put economic growth back on track once it has the outbreak under control. The country is now in the midst of an emergency, and people are refraining for safety's sake from voicing their discontent, but any hitches during the economic recovery will place the government in a tough spot. The Xi administration, well aware of this fact, is exhibiting a firm commitment to revitalising economic activities. That said, achieving this will be no easy matter.

Implications for China's foreign relations

The novel coronavirus has spread far beyond China to countries around the world. The increased mobility of people stemming from China's economic growth was very much a factor in the speed with which the virus travelled. The coronavirus outbreak has clearly highlighted the negative aspects of globalisation. The suspension of China's economic activities has hit the global economy hard, bringing into sharp relief the global economy's dependence on China.
Viruses recognise no borders. However, one must not overlook the fact that the Chinese origin of the coronavirus outbreak, compounded by its spread to South Korea and Japan, has sparked feelings of prejudice against East Asia. Instances of racial discrimination against Asians and those of Asian heritage in certain areas have been widely reported. Discrimination surfacing in the wake of infectious diseases has been an issue throughout history, and it is apparent that this could still become a serious issue.
Sino-Japanese relations have also been impacted by the spread of the novel coronavirus. On March 5 it was announced that President Xi's official state visit to Japan scheduled for early April had been postponed. With the political atmosphere of Sino-Japanese relations relatively good at the moment, a postponed visit is not likely to have any significant negative impact, but there are other destabilising factors. As the novel coronavirus spread in China, the Japanese government initially avoided imposing sweeping restrictions on entry into Japan from China, and some have pointed to this as having enabled the virus to spread more widely across Japan. On March 5, though, the same day on which the postponement of Xi's visit to Japan was announced, the Japanese government declared that full-scale restrictions would be placed on entry into Japan from China, a coincidence that makes one wonder if the Japanese government had been reticent about taking such a step while Xi's visit to Japan was still on the itinerary. Japanese public opinion has not been favourably disposed toward China over the past few years, and it is not beyond the realm of possibility that the responses of both Japan and China to the coronavirus epidemic will exacerbate the Japanese public's distrust toward China. On the other hand, there have been several reports about mutual assistance and cooperation between Japan and China - one such episode involving Japanese donors affixing a classical Chinese poem to boxes of masks sent to China to show solidarity - so this crisis has also served as an opportunity to demonstrate the strong cultural ties between the two countries.

"Analysis: China's Delay of National People's Congress," NHK World-Japan, 25 February 2020

This article is originally written in Japanese and uploaded on 9 March 2020.

1. One of these physicians was the now-famous Dr. Li Wenliang, who put up a post on a WeChat group for fellow physicians urging them to take precautions. This information became more widely known after a screenshot of the message was uploaded to the Web without concealing the names or occupations of Dr. Li.

2. Zhou Xianwang has yet to be dismissed, and remains in office as the mayor of Wuhan as of March 9.

3. Comparisons have been drawn between the recent postponement and the National People's Congress held during the 2003 SARS epidemic. However, the SARS outbreak was only acknowledged in China in April 2003, so the March meeting of the National People's Congress would naturally not have been postponed.